Buying an extended warranty is the same as purchasing insurance. There is the risk that the item you purchase will break down sometime during the lifetime that the insurance covers, and there is a cost to being covered for this possibility. Generally speaking, buying an extended warranty is a wrong decision since most manufactured goods are of very good quality. When you think about it, why would a company offer an extended warranty that you pay for other than to make money? They have figured out the probabilities of having to make repairs under warranty and feel they will profit from the premiums. This is just good business. However, there are times or situations when an extended warranty is worth it.
Buying an extended warranty
Take the purchase of a car, for example. If you plan to keep a car well beyond the regular manufacturer’s warranty, paying for an extended warranty might be worth it. The price of significant repairs on a vehicle can be costly. One claim may be sufficient to cover the cost of the warranty and this cost could also be expensive enough to drain your bank account. It comes down to risk vs. cost, which is one situation in the writer’s opinion; it would be worth it to take the extended warranty and pay whatever it costs.
Electronic stores routinely ask you if you want to purchase insurance for your purchase. A TV that costs $300 to $600 will not break your bank account, and if it stops working, purchasing another is not that expensive. Besides, it may be time for an upgrade since electronics change quickly. In the writer’s opinion, we suggest never purchasing the extended warranty for electronics. Save your money and use it for other more important items.
There is one caveat to this rule. If you depend on your computer for your livelihood and cannot afford to be without one for any time, you may want insurance to ensure a quick repair turnaround. Ensure that this is one of the features of the insurance. Twenty-four-hour turnaround will be significant in situations like this. Waiting for 3 weeks for your computer to return is not something you would want to deal with. The alternative is to have a backup computer. It should have the same software and data so you never have a computer.